International Trade and Investment Law

Digital tax crackdown against industry giants could sting consumers

January 09, 2015 − by Renata − in News − No Comments

James Bradshaw, The Globe and Mail, January 9, 2015

Canada’s government is considering new tax rules to level the playing field for e-commerce vendors that complain foreign giants such as Amazon.com Inc., Apple Inc. and Netflix Inc. have an unfair edge when selling digital products.

A few short paragraphs in the 2014 federal budget invited input on “ensuring the effective collection of sales tax on e-commerce sales to Canadians by foreign-based vendors,” and whether to enforce mandatory collection, as the European Union and Norway already have.

The consultation has received little public attention, even though it may decide whether Canadian buyers pay tax on millions of digital purchases each year. Consumers could end up paying more for video streaming on Netflix or music from iTunes if foreign-based companies lose the right to sell digital products tax-free in Canada. The potential new rules hinge on issues of competitiveness as well as political sensitivities, and could bring the government tens of millions of dollars in new revenue each year.

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